FRANKFURT (dpa-AFX) - Further rising interest rates weighed on the European real estate sector on Tuesday. With a minus of two percent, this was the biggest loser in the sector tableau. In the German market, losses ranged from 2.4 percent for Vonovia to 3.1 percent for Deutsche Wohnen.

The yield on ten-year U.S. paper reached 4.226 percent on Tuesday, another high since November. Ten-year German government bonds marked a high since March at a good 2.68 percent. On the derivatives exchange Eurex, the Bund future fell to its lowest level in a month after days of losses.

As interest rates on the capital markets rise, the refinancing of the real estate sector tends to deteriorate. Sales from portfolios are becoming more difficult because the costs for potential buyers are rising. In addition, from an investor's perspective, interest rate products are becoming more attractive relative to equities, including those in the real estate sector.

"Capital market yields are rising, while at the same time higher borrowing costs are weighing on earnings," analyst Osmaan Malik of UBS said in a report, describing the companies' mishap. The issue of higher interest rates in the longer term is currently dominating the market, he said. For example, the correlation between interest rates and sector performance is currently 61 percent - two years ago, this ratio was close to zero, the expert said.

This can be easily seen in the stock prices: Two years ago, the European real estate sector was not far from the record high of early 2020, with prices above 200 points. Since then, the sector index has almost halved. At 100 index points, the sector was previously well supported. These were the lowest prices for more than ten years./bek/ajx/jha